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Trade Policy Dialogue on the Multiple Dimensions of Market Access and Development
Trade Policy Dialogue on the Multiple Dimensions of Market Access and Development
Session IV Regional Trade Liberalizations as a
Complement of Multilateral Liberalization?
Mario MatusAmbassador of Chile to WTO
México, October 24, 2006
2
PresentationPresentation
Why FTAs/RTAs?
Chilean experience
Looking for complementary to WTO?
3
FTAs/RTAsFTAs/RTAs Scope for Regional Trade Arrangements:Scope for Regional Trade Arrangements:
LimitedLimited Comprehensive Comprehensive
ProblemsProblems Exception to MFNException to MFN Discrimination. Exclusion of other members. Discrimination. Exclusion of other members. Trade deviationTrade deviation Complexity for business community Complexity for business community Different level of negotiating leverageDifferent level of negotiating leverage Do not address all issues (i.e. DS, Export Subs)Do not address all issues (i.e. DS, Export Subs) Erosion of multilateral system if they do not go Erosion of multilateral system if they do not go
beyond & under WTO rules & principlesbeyond & under WTO rules & principles
4
Why FTAs/RTAsWhy FTAs/RTAs Market access (goods)Market access (goods) Easier to negotiate (bilateral fine tuning)Easier to negotiate (bilateral fine tuning) Political reasons:Political reasons:
International (i.e. US-Chile; US-Jordan, etc)International (i.e. US-Chile; US-Jordan, etc) Domestic (i.e. push for internal changes)Domestic (i.e. push for internal changes)
To be paid for liberalizationTo be paid for liberalization Not to be kept behindNot to be kept behind To minimize trade deviation (further negotiations)To minimize trade deviation (further negotiations) WTO slowness for honest free traders WTO slowness for honest free traders
Real free trade (0% tariff)Real free trade (0% tariff) Develop more and stricter rules (i.e. TR, Compt, etc)Develop more and stricter rules (i.e. TR, Compt, etc) Protection of foreign investmentProtection of foreign investment
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Chilean reasonsChilean reasons Foreign trade policy Foreign trade policy
Open economy (Open economy (free flows goods, S & Ifree flows goods, S & I)) Dependent on international trade (Dependent on international trade (more trademore trade)) Small country (Small country (disciplinesdisciplines)) Transparent/legalistic/non corrupted (Transparent/legalistic/non corrupted (disciplinesdisciplines))
Certainty. Rules and disciplinesCertainty. Rules and disciplines Dispute settlementDispute settlement Reduce external economic vulnerabilityReduce external economic vulnerability Attraction of FDIAttraction of FDI Differentiation in international economic contextDifferentiation in international economic context
6
What do we are looking for?What do we are looking for? CommercialCommercial
Trade creation & reduction of trade diversionTrade creation & reduction of trade diversion Elimination tariff peaksElimination tariff peaks Promote exportsPromote exports Induce more competitionInduce more competition
EconomicEconomic Rules and disciplinesRules and disciplines Reduce external economic vulnerabilityReduce external economic vulnerability Attract FDIAttract FDI
PoliticalPolitical Dispute settlementDispute settlement Differentiation in context of international Differentiation in context of international
economic turbulence economic turbulence
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Chile's bilateralism Chile's bilateralism Comprehensive FTAsComprehensive FTAs
Canada 1997 Mexico 1999 Central America (5) 2002 European Union (25) 2003 USA 2004 South Korea 2004 EFTA (4) 2004 Singapore 2005 New Zealand 2005 Brunei 2005 China 2005 Panama 2006 Japan 20062006
Limited Trade Agreements:
Mexico 1991
Venezuela 1993
Colombia 1994
Ecuador 1995
Mercosur (4) 1996
Peru
1998
India
200554 +54 +
8
Chilean Trade I
0
10
20
30
40
50
60
70
80
90
94 95 96 97 98 99 0 1 2 3 4
Year
% o
f gro
wth
W Agreements
W/O Agreements
Total trade
9
0
50
100
150
200
250
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
% o
f g
row
th
Mexico
Canada
US
UE
Korea
Chilean Trade II
10
Chile : Merchandise ExportsChile : Merchandise Exports
4,2 5,27,0 8,1 8,4 8,9 10,0 9,2
11,6
16,0 15,417,9
16,3 17,219,2 18,3 18,2
21,5
32,0
40,6
0
5
10
15
20
25
30
35
40
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Years
Source : Central Bank of Chile
Billion dollars
11
Gross Domestic Product Gross Domestic Product
100 104 109117 125
138 143155
174186
197218
234258 256
267 276282
293311
331
250
0
50
100
150
200
250
300
350
400
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source : Central Bank of Chile
Annual average GDP growth rate 84-05: 5.9 %
(1984 = 100)
12
Growth, trade and poverty (1990-2000)
Growth, trade and poverty (1990-2000)
Evolución del Producto, Intercambio Comercial y Pobreza
0
4 000
8 000
12 000
16 000
20 000
24 000
28 000
32 000
36 000
40 000
1990 1992 1994 1996 1998 2000
años
miles d
e m
illo
nes d
e C
h$ d
e 1
996
20
22
24
26
28
30
32
34
36
38
40
% d
e la
pob
lació
n to
tal
Intercambio (X+M) GDPGDP # of # of
poorspoors
13
Institutional Institutional TransparencyTransparency Objectives, exceptions, Objectives, exceptions,
final provisions, etc.final provisions, etc. DSMDSM
““Non trade issues”Non trade issues” Intellectual Property RightsIntellectual Property Rights LaborLabor EnvironmentEnvironment CooperationCooperation Political commitmentsPolitical commitments
ComprehensivenessComprehensiveness GoodsGoods
Tariffs (no exceptions)Tariffs (no exceptions) NTM (prohibition)NTM (prohibition) Customs (proced & standards)Customs (proced & standards)
Rules of originRules of origin (simple) (simple) DisciplinesDisciplines
Safeguards (Bilat-Global) Safeguards (Bilat-Global) TBT/SPSTBT/SPS Competition / ADCompetition / AD
Services (negative list)Services (negative list) Investment (pre-post)Investment (pre-post) Temporary entryTemporary entry
14
Bilateralism vs MultilateralismBilateralism vs Multilateralism
ComprehensivenessComprehensiveness All topics includesAll topics includes GATT Art. XXIVGATT Art. XXIV GATS Art VGATS Art V Enabling clauseEnabling clause Minimum exceptions in MA (goods & services) Minimum exceptions in MA (goods & services)
Future workFuture work Common rules of originCommon rules of origin Precision on Arts. XXIV & VPrecision on Arts. XXIV & V Common definition of “going beyond WTO”Common definition of “going beyond WTO” Best practices in APEC, OECD?Best practices in APEC, OECD? Develop model for FTAs/RTAs?Develop model for FTAs/RTAs?
15
Spaghetti bowlSpaghetti bowl